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Winning Bet: How BMW’s Location Gamble in ’92 Paid Off

The ‘Power of Innovation’ draws more investment from overseas capital investors.

The Port of Charleston has helped South Carolina lure major automakers, including Mercedes-Benz.

Source: Charleston Regional Development Alliance

by GARY DAUGHTERS

BMW’s 1992 gamble to build its first plant outside Germany in Upstate South Carolina has paid off handsomely, not just for the company but for the state. A quarter-century after the first 318i rolled off the line, BMW’s Spartanburg plant is the nation’s largest exporter of vehicles, producing about 400,000 a year with a 2016 value $9.5 billion. In June, the company announced that it will invest another $600 million in the plant and add another 1,000 jobs over the next four years. Employment at the plant, fewer than 600 in 1994, is to top 10,000 by 2021.

“BMW,” says Governor Henry McMaster, “is the company that, in many ways, put South Carolina on the map when its leadership decided to build its first North American manufacturing facility in Spartanburg.”

The German automaker now anchors an automotive cluster in the Upstate that also includes Michelin North America and dozens of other manufacturers, many of which bring capital investment from outside the US; currently 15 of the top 40 manufacturing companies in Spartanburg County are foreign-owned, according to the Upstate SC Alliance, which recruits new business to the region.

“Bringing jobs and investments from across the world into both our state and nation are critical components of Team South Carolina’s economic development strategy,” says Secretary of Commerce Bobby Hitt. “With approximately 1,200 international establishments currently operating and employing more than 115,000 workers within our borders, it’s clear the strategy is working.”

“Our research for the best possible location ended up with a clear vote for the state of South Carolina.”

— Christoph Bode, CEO, stoba

BMW and Volvo, newly arrived to Charleston with a $620-million investment, were the state’s two biggest 2017 investors. South Carolina’s top 10 projects for the year also included major moves by two other foreign manufacturers, Germany’s Robert Bosch and South Korea’s Samsung. Samsung announced in June that it will open a new appliance manufacturing facility in rural Newberry County, a $380-million investment that is to generate some 950 new jobs over the next three years.

“When we selected South Carolina,” says Hyun Suk Kim, president of Samsung’s Consumer Electronics division, “we chose a state and a community that believe in the power of innovation and [have] the workforce to back it up.”

The Boeing Effect

Foreign firms have helped lead South Carolina’s transformation from textiles and tobacco to heavy industry. But they’re not alone. In Charleston, Boeing has led the way.

“In 2009 when Boeing came in, that was a big turning point for Charleston,” says Mike Graney, vice president of global business development for the Charleston Regional Development Alliance. “A company of that scale chooses your city,” says Graney, “and people take notice.”

With some 7,000 employees, Boeing today is Charleston’s largest private employer. In the coming weeks, Singapore Airlines is due to take delivery of the first 787-10 Dreamliner, the next-generation aircraft manufactured exclusively in Charleston. It’s the crowning achievement of Boeing’s North Charleston plant, which also makes the 787-8 and 787-9 and continues to broaden its portfolio.

“We’ve expanded beyond just the 787,” says Daniel Mooney, vice president of engineering at Boeing South Carolina’s Engineering Design Center. “We’re doing work,” says Mooney, “on propulsion for the new 737 MAX and the new 777X. We want to continue to grow that capability so that when new opportunities come along we can be part of that.”

Charleston’s automotive sector caught fire with the arrival of Mercedes-Benz Vans in 2007. The Mercedes plant in North Charleston has since produced more than 130,000 Sprinter models for the US market. It added production of the midsize Metris van in 2015. The company is now investing $500 million for a new Sprinter production plant that’s to provide up to 1,300 jobs by the end of the decade.

2015 brought Volvo, which soon will release the first S60 sedan from its new plant in suburban Ridgeville. Volvo’s Ridgeville plant is the company’s first in North America, and the Swedish automaker already has announced a $1.1-billion expansion to assemble its flagship model, the XC90 SUV.

Building a New Supply Chain

The presence of the two automotive giants is creating a ripple effect.

“What Volvo and Mercedes allow us to do is to recruit a broader set of manufacturing companies that are going to be looking here,” says Graney. “The automotive supply chains tend to cluster closer and quicker than in aerospace. Volvo, in particular, is likely to generate more spinoff impact.”

Germany’s stoba, a manufacturer of machined components for the automobile industry, is one of the suppliers that has followed. The company is investing $7.7 million and creating 61 jobs in Berkeley County to produce direct-injection fuel systems.

“Our research for the best possible location ended up with a clear vote for the state of South Carolina,” says stoba CEO Christoph Bode. “In addition to having one of our main customers located in Charleston, we also found a very good base of skilled people.”

Indiana-based Cummins Turbo Technologies is another primary supplier to the auto industry that has found a home in Charleston. Cummins touts itself as the world’s largest manufacturer of turbochargers for the medium and heavy-duty diesel engines market.

“We came to Charleston in 1989, so we’re very proud of the fact that we got here early,” says Damon Newby, Cummins site leader.

Since moving to Charleston, Cummins has consolidated all of its North American manufacturing interests there and has expanded its footprint to 200,000 sq. ft. (18,580 sq. m.) with over 600 employees.

“Charleston,” says Newby, “is moving in a very exciting direction. The influx of smaller businesses and broader businesses is transforming the city. It’s a very interesting and rewarding place to live.”

Gary Daughters
Senior Editor

Gary Daughters is a Peabody Award winning journalist who began with Site Selection in 2016. Gary has worked as a writer and producer for CNN covering US politics and international affairs. His work has included lengthy stints in Washington, DC and western Europe. Gary is a 1981 graduate of the University of Georgia, where he majored in Journalism and Mass Communications. He lives in Atlanta with his teenage daughter, and in his spare time plays guitar, teaches golf and mentors young people.